Tax Reform for All Nebraskans

Taxes are too high in Nebraska. High taxes impede economic growth. High taxes aren’t attractive for entrepreneurial growth and high paying jobs. Additionally 43 states exempt a portion of or all social security income from taxation, but Nebraska does not. Twenty-three states exempt a portion of or all retired military pay, but Nebraska does not.

Taxes are too high in Nebraska. High taxes impede economic growth. High taxes aren’t attractive for entrepreneurial growth and high paying jobs. Additionally 43 states exempt a portion of or all social security income from taxation, but Nebraska does not. Twenty-three states exempt a portion of or all retired military pay, but Nebraska does not.

The Small Business and Entrepreneurship Council states in their 2012 U.S. Business Policy Index that Nebraska’s top personal income tax rate is the 35th highest in America and higher than every one of our neighboring states.

According to the Tax Foundation, Nebraska’s Business Tax Climate is 31st out of fifty states. That’s mediocre at best. We are not even in the top half of all states.

While rankings are important, this is really about the next generation of Nebraska’s leaders – our sons and daughters, and our grandchildren. How many of us have family members who no longer live in Nebraska because they couldn’t find a job here or they couldn’t find the right career here in Nebraska? The answer is too many.

Nebraska needs to reform its tax code so that we have a modern, simpler and fairer tax code. The question is how to do it.

The State of Nebraska’s sales and income tax system generates approximately $4 billion in revenue. The income tax system raises nearly $2.4 billion. The remainder comes from sales tax revenue. But, did you know that the State of Nebraska provides $5 billion in sales tax exemptions? Nebraska exempts more than we collect. That’s not fair to small businesses and working Nebraskans.

Imagine if we eliminated just half of the current exemptions. What would that mean for Nebraskans? Nebraska wouldn’t need to have an individual income tax or a corporate income tax. Without the individual income tax and the corporate income tax, there would be no income tax on working Nebraskans.

Social security and military retirement income would no longer be taxed. There would be no tax on small business income. We need a modern tax code that rewards productivity, profits and job creation and our tax system shouldn’t favor one industry over another.

The world has changed and our current tax system needs to be modernized. It’s been nearly five decades since Nebraska had a serious debate about our overall tax system.

Life has changed drastically since the 1960s. We were operating in a completely different economic environment then. The average cost of a new home was $24,000. A first-class stamp was five cents and gas was 33 cents a gallon. In the 1960s, Americans didn’t even have personal computers in their homes.

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Today, we live in an electronic age. Today, we are operating in a technology-driven, global free market economy.

Earlier this week, Legislative Bill 405 was introduced that proposes eliminating many business sales tax exemptions that could lead to the elimination of the individual income tax and the corporate income tax or at least lowering Nebraska’s individual and corporate tax rates.

This will provide a starting point for our discussion. I want to emphasize one point – our proposal will not tax food.

This tax debate will be challenging, but it is necessary. Nebraskans have strong opinions, and we are able to disagree on policy in an agreeable and respectful manner. I welcome and look forward to your input. I am prepared to work with all Nebraskans, because together we can develop a better tax system for Nebraska.

We want good jobs and good careers for our young people so they won’t leave the state. We need to exempt Social Security and retirement income from taxation so that seniors and retirees won’t leave Nebraska for Wyoming, South Dakota, Florida or Texas where their Social Security and retirement income won’t be taxed.

The choice is ours. This is about Nebraska’s future. We care about this special place we call home. We want Nebraska to be an even better place to live, to work and to raise a family in the future. Let’s begin this statewide conversation, and together we will find a Nebraska common sense solution.